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New City Labor Contracts Must Be Better Deal For Taxpayers, Rahm Says

By Heather Cherone | August 9, 2017 4:55pm | Updated on August 11, 2017 11:36am
"We are more financially secure today than we were six years ago,” Mayor Rahm Emanuel said.
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DNAinfo/Heather Cherone

DOWNTOWN — Upcoming negotiations with city unions need to result in overall savings for taxpayers to help “solidify” the city’s improving financial condition, Mayor Rahm Emanuel said Wednesday.

Emanuel's remarks, in a speech to the Chicago Investors Conference, which includes some of the city’s largest investors, signaled the mayor's willingness take Inspector General Joseph Ferguson's advice and use the expiration of the contracts to negotiate a new deal designed to reduce costs and improve services.

Emanuel touted the improvements in the city's financial condition since he took office in 2011 — saying he had removed the "biggest cloud" hovering over the city's finances by putting Chicago's four pension funds on firmer footing.

"By no means is Chicago out of the woods," Emanuel said at Columbia College. "We are not running away from our challenges. We will meet them head on."

Emanuel acknowledged that perhaps the biggest challenge facing the city is the need to renegotiate labor agreements with 90 percent of the city's 30,000-member workforce, which expired June 30. Those up for new contracts include laborers, firefighters, police and other municipal employees.

The unions must partner with the city to ensure those labor agreements "benefit the entire city," Emanuel said.

"As we negotiate the new contracts, I expect … to see savings in wages and benefits, health care and other places that are key to the City of Chicago’s future,” Emanuel said.

Emanuel used the speech to tout the greatest hits of his nearly two terms in office, including Chicago's status as the No. 1 city for corporate relocations and its bragging rights as the restaurant city of the year, as determined by Bon Appetit magazine.

"And that's not because of my winning personality," said the famously profane and prickly Emanuel, drawing knowing laughter from the crowd.

The city is "well on its way to establishing the type of growth we want to see" by investing in "stability and certainty" at a time when uncertainty is the rule in Washington and Springfield, Emanuel said.

Emanuel said that certainty was based on his commitment to end practices "that hid the true cost of government."

He said he will refuse to just raise taxes or slash services to get the city out of the red.

The practice of the city taking on more debt to pay off existing debt — known as "scoop and toss" — will end in 2019, Emanuel said.

City officials will face a budget gap of $114.2 million as they begin to craft a spending plan for 2018, according to the city's annual budget forecast released July 31.

Emanuel faced a $635.7 million deficit after succeeding Mayor Richard M. Daley in 2011.  The drop in the city's structural deficit — expenses minus revenue — is expected to be at the center of Emanuel's likely bid for a third term as mayor of Chicago.

The stability touted by Emanuel is largely due to several massive tax increases, including the largest property tax increase in Chicago's history — approved in 2015 — and a 30 percent increase in the water and sewer tax — approved in 2016.

Given the green light by legislation approved by state lawmakers, Emanuel is expected to ask aldermen to hike taxes this fall on cellphones and land lines by 28 percent. That will keep the laborers' pension fund out of the red, officials said.

Emanuel told investors Wednesday that he would continue to take a “balanced” approach to new taxes and has so far declined to say if he will propose to hike taxes or fees this fall to bridge the projected gap — or to cover the second installment coming due on the mayor's promise to expand the Chicago Police Department by 970 positions.

City officials have announced plans to hire 266 police officers, 100 detectives and 75 sergeants in 2018, which is expected to cost at least $60 million.

"I’m not going to make up in two or three years what took 30 years to create," Emanuel said.

The city is expected to refinance up to $2.5 billion in debt under a new state law that could save taxpayers as much as $75 million a year, officials said. That method of debt management is already used in New York City, Philadelphia and Washington, and could raise the city's credit rating, Emanuel said.

Another obstacle facing the city is the unknown cost of efforts to reform the Police Department in the wake of the fatal shooting of Laquan McDonald.

In addition, it is not clear whether the city will seek to solve the perennial budget crisis afflicting Chicago Public Schools by adding more money to CPS coffers.

Emanuel again blamed Illinois Gov. Bruce Rauner for CPS' financial woes, saying Illinois does not fund Chicago schools adequately.